WESTERN enterprise penetrated into many different sectors of the
Chinese economy. In the course of time it concerned itself with internal
and external trade, banking, insurance, shipping and its ancillary services, land transport, manufacturing, mining and public utilities. These
various branches of economic activity will be considered in turn. At the
outset, however, it is well to note that most of them grew directly and
inevitably out of the original interest of the Westerners in fostering a
profitable Chinese foreign trade. The merchant firm thus became, and
remained, the typical representative of Western enterprise in China. At
the same time, the leading merchants did not normally confine themselves to strictly mercantile business. Although foreign trade remained
their chief preoccupation, the scope of their activities was usually very
wide, and throughout the modern era (i.e. from 1842) a large proportion
of the dealings between Chinese and Westerners was in the hands of
firms with an extensive range of interests, commercial, financial and
industrial.

The reasons for this diversity in the interests of the typical, large
merchant firms are not far to seek. Foreign merchants who established
themselves in the Treaty Ports after 1842 were obliged, in the absence
of a Chinese financial and commercial system of a modern type, to
provide many of the auxiliary services which in the great trading centres
were usually left to specialists. They therefore undertook various kinds
of banking and foreign exchange business; they entered the shipping
trade; and they promoted insurance companies. They were drawn into
these activities mainly because it was only by broadening the basis of
their businesses that they could foster or preserve their mercantile
interests. The functions which a Western trading firm had to assume
were determined primarily by the backwardness of the Chinese in
everything that appertained to a modern commercial society. Once
these subsidiary enterprises had been set up, they began a career of their
own, and in time they had effects on the Chinese economy and on the
business practices of the Chinese that were not contemplated when they
were first established.

Important as these other activities ultimately became, it was mercantile
enterprise which from the earliest period of Sino-European relationships
until the present has predominated. To this enterprise China owed the

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